For those of you who haven’t been to the Perot Charts site, have a look.  It has a great collection of visuals that pertain to our economy.  This one caught my eye:

Picture source:  http://perotcharts.com/2008/05/the-nations-healthcare-dollar-2004/

I recently sent simple letters to both Herb Kohl and Russ Feingold voicing my concerning about H.R. 3200 and the excessive government spending.  Both sent me nice template email replies saying thanks. I wasn’t expecting much more than that. I especially liked the email address on the response from Senator Feingold. DO NOT REPLY.  LOL!  Great PR Russ!

I would be interested to know how many people write the senators during the course of a typical year.  How about this year?

Anyway, I thought I would share my letter and their responses with you.

My Letter:

$550M for jets, trillions of dollars on a stimulus that isn't working, a $3B coupon for people that were already going to buy a car. STOP SPENDING!

As for HR-3200, again, this is not the time to increase spending to solve the problem. While there are many ways to begin to address the 15% of Americans without healthcare, spending my hard earned dollar should not be one of them. STOP SPENDING!

Response from Senator Feingold:

Thank you for contacting me to share your concerns about universal health care.  I appreciate your taking the time to share your thoughts with me.

It is far past time for Congress to guarantee health insurance coverage for all Americans.  Too many Americans are forced to make basic decisions regarding their health based on cost rather than on medical reasons; too many delay seeking treatment and do not receive preventive care, which results in more costly, or even fatal, consequences down the line.  Our country spends $5,670 per capita annually on health care - which is twice as much as any other industrialized nation - and 15.6 percent of our gross domestic product.  Despite this spending, we are not healthier than those other countries, and we still have more than 46 million Americans - including eight million children - who do not have health insurance, and countless others who are underinsured.

These high and rising costs take a tremendous toll on American families and businesses.  While inflation grew 9.7 percent, and wage growth was 12.3 percent, premiums for family insurance coverage rose 59 percent from 2000-2004 and show no sign of stabilizing.  As a result, many employers are shifting much of their health care costs to employees, no longer providing health benefits, or eliminating positions.

I have worked for years to try to break through the gridlock preventing health care reform.  For example, I have introduced legislation, the State-Based Health Care Reform Act, with Senator Lindsey Graham (R-SC), that would provide federal grants for states to develop and administer expanded health plans to help ensure coverage for all of their residents. The plans would have to include income protections and meet basic coverage requirements; current federal programs like SCHIP and Medicaid would have to be protected.  This bipartisan legislation was intended to help ensure that Congress addresses the need for meaningful nationwide reform.

The full Senate is expected to consider health care reform legislation soon.  I look forward to Congress finally taking up this issue, and I will continue working to improve access to health care and make health care more affordable for the people of Wisconsin. I look forward to hearing from you in the future.

Response from Senator Kohl:

We face a deep and painful recession, and our economy will not recover overnight.  To help struggling Americans through these tough times and get our economy moving again, Congress passed a package of tax relief and targeted investments called the American Recovery and Reinvestment Act.  Since then, I have been closely monitoring the implementation of this recovery package, and I welcome the opportunity to discuss this issue with you.

           Tax relief is a vital part of the recovery package, and over two million households in Wisconsin are already keeping more of their paycheck due to the Making Work Pay tax credit.  This credit will result in a tax cut of about $800 for 95% of working families across the country.

           Unemployed workers are struggling to find new jobs, and factory closings are straining cities and towns across Wisconsin.   The recovery package is funding vitally needed job training programs for Wisconsinites who lost their job when their plant closed.  Recovery funds also support increased unemployment benefits to help displaced workers get back on their feet.

New transportation projects are underway across Wisconsin, creating jobs and improving vital infrastructure.  These include roadwork throughout the state, airport rehabilitation in Green Bay and Rhinelander, and energy efficiency upgrades for buses in Stevens Point.  Transportation projects across the country are costing less than expected, and Wisconsin alone has saved over $10 million.

Overdue energy and environmental investments are now made possible due to the recovery package.  In Wisconsin, increased energy tax credits have sparked interest in geothermal power.  The credit helps to overcome the initial cost of building geothermal systems, leading to an immediate savings in energy costs.  Recovery funds are supporting cleanups of hazardous waste sites in Baraboo, Milwaukee, and Wauwatosa.  This land had been left abandoned, but may now be returned to productive use.

Ensuring that every American can see how their money is being spent is a central part of the American Recovery and Reinvestment Act.  I encourage you to follow the progress of the recovery package at http://www.recovery.gov, and track investments in Wisconsin at http://www.recovery.gov/?q=content/allocation-programs&state=WI.  To stop waste, fraud, and abuse, these websites include links to inspector general hotlines and whistleblower information.

I have heard from many people across Wisconsin with a variety of views on how to best rebuild our economy, which has been very helpful to me.  I will keep your thoughts in mind as the Senate oversees the progress of the economic recovery package.  Again, thank you for contacting me and please feel free to do so again in the future.

                                                                           Sincerely,
                                                                           Herb Kohl
                                                                           United States Senator

I glanced at my bookshelf this morning and laughed.  “The Unknown Ideal” how fitting given the news these days.  I think it’s time for our leaders and lawmakers to revisit this book.

Capitalism: The Unknown Ideal

Here is the bill:

http://edlabor.house.gov/documents/111/pdf/publications/AAHCA-BillText-071409.pdf

And here is a diagram of how it will work:

The current healthcare/insurance industry is already a take from the healthy/wealthy and give to the sick/poor.  This bill will take this concept to the next level as well as introduce additional spending and waste.  This is a bad idea.  We should seek to reduce waste and spending on overhead. 

“U.S. health care spending is expected to increase at similar levels for the next decade reaching $4.3 TRILLION in 2017, or 20 percent of GDP.” (taken from NCHC)

With that, let me talk about where I see the issues.

Overhead

Where do we attribute this spending?  In the stat above $4.3T equates to about $14K annually per person in the US.  While some of the growth can be attributed to the increase in the aging population, where does the rest of the growth come from and where does this money go? Let’s look at the revenue of some of the larger insurance companies:

Conventry: $12B annually.

CIGNA: $20B annually.

Humana: $30B annually.

United Health: $80B annually.

At this rate, it should be obvious where we spend $2.4T today or see where how we will get to the $4.3T by 2017.  So do we need healthcare reform or insurance reform?

Where does the spending go?  Much of it is waste in the form of overhead.  Obviously insurance companies take a big chunk, doctors, hospitals, drug companies, long-term health care facilities, etc.  Think about all the paperwork you fill out, the plastic card you carry, the systems used to keep your records, the bills sent to you and your insurance company, etc. It takes a lot of people to support this system. I don’t claim to have the answers here but I keep coming back to Lean Systems and thinking if we could eliminate waste here it could dramatically decrease costs in this area.

Personal Responsibility

Atul Gawande wrote an interesting article for the New Yorker on where some of the money goes.  This article highlights some of the reasons for the increase in spending over the coming years.  Lack of accountability.  Why should people who take care of themselves, eat right and exercise be penalized (pay) for those that do not?  Jordan Shlain, MD suggests, “You either get with the health program or you don't get the benefits.”  A Practicing Doctor's Prescription for Health Care Reform.

Higher Expectations

As our understanding of the human body, disease and aging continues to increase so does the quality and efficacy of modern medicine and treatments.  We find ourselves in a culture that has zero tolerance for discomfort or inconvenience.  Have you ever gone to the doctor because you were tired and dealing with your common cold?  We are spending more, because we demand more.

Lack of a True Health Care Market

Have you ever comparison shopped for your health care?  Do you even know where to get this information?  Try calling your doctor’s office and asking how much it will cost for a test for strep throat test, an arm cast, CBC or CHEM-7.  How do you find the best orthopedic surgeon in your area?  It’s easier for me to find a good plumber that a good doctor. We need a better system to comparison shop and determine those providers that have the highest value (price vs. level of service).

Conclusion

ObamaCare seeks to solve a perceived problem through an increase in spending.  This is NOT the answer!  We should look at addressing the issues above in small test markets and empirically evaluate the outcome. As always your comments are welcome!

Additional reading:

Long Term Outlook for Health Care Spending

Canadian and American health care systems compared

Does Health Cost Too Much? If you think so, stop buying so much

Ann C. Engle’s Summary of Bast, J. L., R. C. Rue and S. A. Wesbury Jr. 1993

Ask the Editors: Why Does Health Care Cost So Much?